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County Denies Licensees’ Request For Quick LCB Takeover

OCEAN CITY — With legislation disbanding the Worcester County Liquor Control Board (LCB) essentially down to a mere formality and another summer season rapidly approaching, the Worcester County Licensed Beverage Association (WCLBA) this week asked the County Commissioners to expedite its takeover, but the county’s elected officials are not in a hurry to speed up the transition.

House and Senate bills abolishing the existing LCB and replacing it with a similar operation run by the county have breezed through their respective houses and are basically just waiting on Gov. Martin O’Malley’s signature to become reality. The bill signing could come as early as later this month or early in May with an effective date of July 1, but the WCLBA, an association representing over 90 licensees in Worcester, is pushing the commissioners to urge state lawmakers to amend the bills to make them emergency bills.

Amending the bills to emergency legislation would make them effective immediately after the governor signs them, a measure desired by the licensees in light of alleged price gouging by the existing LCB over the last several weeks.

“Through member phone calls to you as well as other commissioners, we have requested the county consider amending these bills to make them emergency bills, thus becoming effective immediately upon the governor’s signing of the bill, which would occur not later than May of this year,” a WCLBA letter to Commission President Bud Church reads. “We believe advancing the takeover date is imperative given recent developments.”

Those recent developments include an apparent spike in the mark-up charged by the LCB over its cost on several popular brands. According to the letter, as of March 2011, the LCB’s average mark-up over cost is 30 percent with some brands marked up as much as 60 percent. Inexplicably, one particular brand, Ketel One Oranje, was marked up 142 percent, according to the WCLBA attachment.

WCLBA President Doug Buxbaum believes the lame-duck LCB is attempting to maximize its revenue, and contribution to the county and its municipalities, on the way out the door to show the elected officials what could be if they were allowed to continue to run the distribution operation.

“I think they’re really trying to stick it to the commissioners and stick it to the licensees,” said Buxbaum. “They’re jacking up the prices again so they can give back $1 million this year. They’re trying to set the bar really high so they can say look what you’re giving up.”

In the letter to Church, the WCLBA pointed out the alleged price spikes affect the county, and ultimately the consumer, as well as the business owners.

“This pricing is an unnecessary financial burden on the residents of Worcester County that could be reduced in the near term if the county assumes control of the LCB sooner and adopts the pricing structure it has indicated it would,” the letter reads. “Indeed, as we understand it, the intention of the county is that licensee pricing will be on a cost plus 15-18 percent mark-up, substantially less than what the LCB is charging to retailers, and ultimately the taxpayers of Worcester County.”

Church said this week the county, for a variety of reasons, is not prepared to take over the operation any earlier than planned.

“The County Commissioners met yesterday [Tuesday] and decided we were not in a position to honor their request right now,” he said. “We just don’t have the staff or the ability to take over that operation on such short notice. … We understand the frustration of the licensees and we’re very sympathetic to their situation. It’s been brought to our intention the LCB has been charging excessive prices over the last 30-45 days and we’re looking into that.”

In the meantime, county officials are working with existing LCB leadership to ensure the future transition is a smooth one, according to Church.

“We are working closely with the LCB to get a better understanding of how they operate,” he said. “We are meeting with them daily to make sure we know what to do and what not to do when we ultimately take over the operation.”

While most of the rank-and-file LCB employees will be retained, it has become clear the leadership will likely be replaced. Although no new department head for the new county-run operation has been made public, it appears the commissioners have tapped one of their own, former Commissioner and LCB Executive Director Bobby Cowger, to oversee the transition.

“There is a very, very real possibility that we are going to hire Bobby Cowger as a consultant, but not a department head,” said Church. “When he ran the operation, the licensees had a lot of confidence in him and he was regarded as fair and up front. We think he is someone who could get us over the hurdles.”

Buxbaum said later this week the WCLBA had heard Cowger had already been tapped as a consultant for the new county-run LCB. Buxbaum agreed Cowger could be a strong candidate to oversee the transition.

“When he was in there, the price lines were in check and the revenue was good,” he said. “We worked with him for five years and almost always had a good relationship. We hope they bring him in as soon as possible, as soon as next week even, This is the time of year when the LCB does most of its buying and the licensees are ramping up for the season, so it’s critical they have their people in positions of leadership as soon as possible.”